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Three super simple finance rules

April 16, 2024
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FinMeUp
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FinMeUp

Three easy investment guidelines

 

Rule of 72: Doubling your money

To calculate how many years it will take to double your money at a given rate, simply divide 72 by the rate.

E.g. You earn 8% interest on your deposit. 72 divided by 8% = 9 years to double your money

 

100 minus your age rule: Risk allocation

This rule is used for allocation in riskier investment vehicles, such as stocks and crypto. The younger you are, the more risk you can typically take on.

E.g. Suzie is 35 years old. She should allocate 100 minus 35 = 65% of her money to stocks/crypto and the rest to safer investment vehicles.

 

3X Emergency Rule

Work towards saving up to 3 times your monthly income in an emergency fund. This fund must be used exclusively for unforeseen circumstances, such as job loss or medical emergencies.

E.g. You earn 20K per month. Build your emergency fund over time until it reaches 60K. 

 


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